Finance

LIQUIDITY RATIOS

The relationship of current assets to current liabilities is an important indicator of the degree to which a firm is liquid. Working capital and the components of working capital also provide measures of the liquidity of a firm. Ratios that directly measure a firm`s liquidity provide clues concerning whether or not a firm can pay its maturing obligations. The current (or working capital) ratio and the acid-Test (or quick) ratio are important ratios that are used to measure a firm`s liquidity. Continue reading “LIQUIDITY RATIOS” »

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